SIR JULIUS VOGEL APOSTLE OF HIGH FINANCE

Korero (AEWS), Volume 3, Issue 7, 7 May 1945, Page 7

SIR JULIUS VOGEL APOSTLE OF HIGH FINANCE

By

Speaking of Sir Julius Vogel, a wellknown newspaper once said : “ The

Treasury to him is the Tattersall of finance. He must give and take odds. Official ledgers are betting-books on a large scale, and balances represent what the State stands to win or lose.”

This was undoubtedly a case where the writer was so pleased with his analogy that he allowed himself to be led astray by it into a somewhat unjust exaggeration. It was true that Vogel always believed the millenium, or something very like it, could be attained by bold, carefully-planned financial enterprises and Government-guaranteed loans at cheap rates of interest—a creed which, though not exactly one of moral elevation, had a great deal to be said for it in an empty country with few roads and railways—but he was not a true gambler in the real meaning of the word, because he always saw to it that the chances of fortune were enlisted in his favour by careful planning.

Unhappily for him, this rule only applied to public transactions. In private life he really was a gambler—a reckless, injudicious one, too, in consequence of which he died penniless. He was always ready to speculate with his own money, but when investing State funds he always wagered on what he believed were certainties.

His first attempt to guide the country’s financial policy was not exactly a fortunate one —at least it sounded unfortunate, especially coming from him. Even in those days there were new and old

colonists. Vogel, a brilliant Jewish journalist, having only lately arrived on the heels of the Otago gold rush, was decidedly new, and an object of suspicion for the old. In 1865 he wrote to Edward Stafford, the Premier, explaining a scheme he had for settling the lands confiscated from the Maoris after the Waikato War. A million acres of this land was to be disposed of by lottery in sections of from 50 to 100,000 acres. Every section disposed of was to carry with it the grant of a certain number of free passages for immigrants from England—nearly 2,000 in all. The winner of a 100,000-acre section would be given eight free cabin passages ; the winner of 10,000 acres, four cabin passages ; the winner of 500 acres, five steerage passages ; and so on. Free grants of land were to be made to 1,000 volunteers, who would be expected, if necessary, to defend the settlement. According to Vogel’s calculations, the lottery would bring in a sum of £2,000,000 to the New Zealand Government.

The proposal would surely have carried greater weight, the aim and object of the propbser have sounded more altruistic, had not Vogel gone on to add

“ I have the honour to offer, as a condition of trying my plan, that its negotiation be left to me in conjunction with any one named for the purpose by the Government or Provincial Governments.

“ In respect to the cost of negotiation, the expenses will be large. There will have to be a vast number of agencies and sub-agencies for the disposal of tickets, and an allowance of 2| to per

cent, will have to be made to them. The advertising will be very costly and the correspondence costly. Taking these into consideration, I think that an allowance of 10 per cent, to cover all charges will have to be made to the negotiators.”

Stafford made no objection to Vogel’s proposal. As the scheme, if undertaken, would have to be carried out by the provinces, he forwarded copies of Vogel’s letter to Wellington, Auckland, and Taranaki, the three provinces which contained confiscated Maori lands. Wellington thought it a good idea, but had no land which could be disposed of in the manner suggested. Auckland would have been very glad to consider the plan, but unfortunately had no land available. Taranaki flatly disapproved, and thought the scheme undesirable. There is little doubt that many other people thought it undesirable, too. The scheme was allowed to drop, and Vogel got little credit for having proposed it. Henceforward, the term gambler was used more freely than ever in connection with his name.

Five years later, with judgment developed and ideas matured, Vogel made a more statesmanlike gesture. The Stafford Government had fallen ; William Fox was in power with Vogel as his Minister of Finance. The long drawn-out Maori War had left the whole country in a state of exhaustion and stagnation in spite of its potential wealth. Seeing that the answer to the problem lay in improved communications, Vogel offered to wager /To,ooo, 000 against fate that the making of roads and railways would bring prosperity to New Zealand. The borrowed millions need not be allowed to hang like a millstone round the necks of future generations. In its unoccupied waste lands the country possessed an asset by means of which the debt might soon be liquidated. Three and a half million acres might be set aside as a national estate to offset expenditure. Some of this land could be sold for cash, and some of it let until in course of time it acquired positional value. Vogel calculated that the returns from it, beginning at £5,000 for the first year, would rise to /130,00 b in the tenth year. Apart from this, the railways themselves might be expected to pay handsomely, until at

the end of a decade the whole of the interest on ' the borrowed money would be paid by the national landed estate and the new railways. We shall be told,” Vogel concluded, “ that these proposals will entail on posterity an enormous burden. Grantedbut they will give to posterity enormous means out of which to meet it.”

Vogel’s* scheme, known as the Public Works and Immigration, Policy, was accepted as regards its proposals for borrowing money but the setting-aside of a national . landed estate was never carried out. The Provincial Governments had always a wealth of excuses at their disposal but no land. Like a man who licks the sugar coating from a pill but finds the pill itself too bitter to swallow, the politicians accepted what money could be borrowed but refused to effect measures for its repayment. After twice vainly attempting to get reserves of land set aside, Vogel tried other means of providing financial safeguards. By reckless burning the forests of New Zealand had been reduced from an area of 20,000,000 acres in 1840 to 12,000,000 acres in 1873. It was high time that something was 'done to check this wastage, but if the forests could be conserved and at the same time made to pay for the railways, then two objects of supreme importance would have been attained simultaneously. To accomplish this Vogel proposed to take over 3 per cent, of all provincial lands, and in return to forgo the sinking fund of 1 per cent, which the Provincial Governments had to pay the Central Government for the cost of their railways. The lands so taken were to be used for planting and conserving State forests, the value and profits of which would offset ' the money borrowed to construct railways. " I am sure,” said Vogel at the end of his speech in the House of Representatives, “ that it would be a pleasing thing for us to be able to say to those who come after us : ‘We have borrowed money by which to cover the country with railways ; we have taken care not to injure its climate ; and we now hand to you, in these forests, a magnificent property which will more than pay the liabilities we have devolved upon you.’ ”

Persuasive as were his words, the House of Representatives rejected his suggestion. It was indeed hard to be described as a gambler and yet not allowed to make gambling safe for democracy, to be continually prevented from ensuring that when the State made a bet it was betting on a certainty. The provinces were at the root of all opposition ; it was always the Provincial Governments which prevented him from hedging or laying off for the sake of safety and security. Nothing satisfactory would ever be accomplished as long as they existed, so he brought their existence to an end by abolishing them altogether.

Wearied by frustration and with his health failing, Vogel retired from active politics and went to England for a term as High Commissioner. While there he explained to the English in a letter to The Times how the famine problem in India might be solved ; and in another letter to the Standard, how the British Empire should be federated ; but all this while his thoughts were continually returning to the country of his adoption. New Zealand, meanwhile, had fallen upon

evil days. An economic depression, which the succeeding Governments had failed to cope with, had settled on the land. When, by a curious coincidence, Vogel returned in 1884 on what he announced as a short visit, just when the political turmoil was at its height, he was acclaimed as a saviour by the people of New Zealand, who had forgotten that he was a gambler but who remembered only too well those glorious pictures of future prosperity he had been wont to paint for them. Vogel was very infirm in these days but his mind was still full of plans. Forming a Government in collaboration with Robert Stout, he began the task of raising the country from its despondency and inertia.

In some respects Vogel’s plan for the regeneration of New Zealand in 1884 was very like the Public Works and Immigration Policy of 1870 —minus the immigration The trunk railway, still in a sadly disjointed condition, was to be completed, and another line constructed to connect Canterbury with the west coast. With the export of gold greatly decreased, the price of wheat fallen to an unprofitable level, and the frozenmeat trade still in its . infancy, the country’s prosperity was dependent to an extraordinary degree on the price of wool. To trust so entirely to the fortune of a single product seemed to Vogel not only dangerous but unenterprising. He proposed, therefore, that the Government should lend its support to the initiation of other enterprises, and its prestige to the finding of markets for them. Why should not the teeming millions of India be persuaded to become carnivorous and live upon frozen meat ? Why should not the rapidly growing dairy industry be stimulated by the manufacture of ghee, or clarified butter, for export to the same country ? Brazil might be induced to take, woollen fabrics produced in newly created local factories, and the islands of Oceania should be taught to look upon New Zealand as the workshop of the Pacific. Vogel made inquiries about the production of tobacco and silk, and renewed his interest in the preservation of State forests. An iron furnace was already working, with but little success, on the black iron-sand of Manukau Heads,

but now a Government bonus was to be given for the production of pig and wrought iron, and a New Zealand iron company organized to take advantage of the offer. The New Zealand seas teemed with all kinds of edible fish, and Vogel determined to establish fishing villages on the southern coasts to cure and tin fish for export to the old world. Stewart Island, he believed, was the most suitable of all places for the purpose. It commanded the best fishing-grounds in the colony, and had abundant timber from which a supply of sawdust could be procured for smoking the fish. Even at that comparatively early time the people of New Zealand had begun to lay the foundations that have made their country a paradise for dentists and deprived their children of teeth at an early age. The consumption of sugar was 74 lb. per head, while in Great Britain it was 38, and in the United States 27. As the soil and climate of New Zealand were suitable for growing sugar beet, it would be possible to grow locally all sugar that was required, and thus save the sum of £600,000 spent annually on importing the commodity. Never were the potential resources of any country more fully explored than were those of New Zealand by Julius Vogel during his last term of office.

The story of Vogel’s numerous schemes for restoring prosperity resolves itself into a long list of failures. Progress on the North Island trunk line was so slow as to be almost invisible. Fruitless negotiations with a contracting company for the building of the west coast railway were still dragging on when the StoutVogel Government fell from power. The new industries were never started.

Perhaps it was Vogel’s fault. Perhaps he was an unpractical visionary with power to conceive but no ability to organize. However that may be, it must have been a bitter disappointment for him to recognize so many possibilities and yet be unable to put his schemes into practice. Did he never feel that he was being denied even a gambler’s chance ? Did he never compare himself to a man playing poker, holding marvellous hands but yet having insufficient money to back his bids, or finding that

his opponents threw in their hands, refusing to bet against him ? Whatever the answers to these questions may be one thing is certain. Never in the darkest hour of economic depression did he lose courage or confidence. Before retiring to England, a beaten man, to spend the remainder of his years in extreme poverty and ill health, he tried hard in his public utterances to rouse the fainting spirits of his fellow-country-men, to show them what a safe bet their country still was, what a strong favourite in the race of nations. An extract from one of these speeches may serve as an epilogue to his political career.

“ For thirty-four years I have closely watched the progress of the Australasian colonies. There have been times when it seemed to me that terrible reverses must infallibly overtake them, and again and again has the weakness of my judgment been rebuked, until I have learned to think that the logic of facts is in favour of recovery rather than decline. The growth of these colonies has been so marvellously rapid that the mind is unable to retain the memory of the halting periods. As in the past, so in the future, and in all humbleness of spirit I dare to predict that many generations will pass away before the colonies beneath the Southern Cross reach the culminating greatness of their destiny.”

We have received the following note from Mr. Burden about his article on William Webster, published in Kovevo, Vol. 3, No. 4 : —

“ I have to apologize for a mistake made, or at least implied,' in my article on William Webster. My thanks are due to Mrs. R. M. Burnard, of the Historical Branch, Department of Internal Affairs, for pointing out that the Webster claims did not expire in 1895, but were revived in 1909 and only finally settled in 1926.”